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The State of Decentralized Derivatives Trading: Research #11

The release of the Freaky Elves utility NFT collection by Spin was one of the most important events for us in early March, even though the research and development of Spin’s core product — DeFi derivatives infrastructure on NEAR — never stops. So, we’re back with another research that dives deeper into the land of on-chain derivatives trading and informs you about the core news and updates of the industry.

Market sentiment & protocol tokens performance

Since our previous update, cryptocurrency markets are stagnating: while the BTC price increases a bit, the ETH price slightly goes down. Altcoins feel even worse, and the DPI index slowly decreases. Nevertheless, some of the assets we watch closely behave differently from the rest of the market.

SpookySwap — the most popular exchange on the Fantom blockchain suffers as Andre Cronje, probably the most famous crypto developer, is stepping out of DeFi/crypto space which affects all protocols related to him, including Spooky.

Astroport — an AMM DEX based on Terra, has at the same time its token price growing due to the influx of new users to the Asian blockchain. Since the launch in February, the Terra TVL has increased almost twice.

MNGO token definitely feels better than its competitors. This is probably due to the fact that there wasn’t any presale (excluding a small $100k funding), and all investors got the MNGO token for the same price of $0,152, so none of the hedge funds is selling their investments from the early rounds.

The next lucky is ApolloX which introduced perpetual trading on PancakeSwap. Collaboration with Binance Smart Chain’s largest DEX is a big move for protocol.

Unfortunately, Katana and Friktion still don’t have tokens, so we can’t estimate their performance, but Dopex — one of the first decentralized options vault (DOV) protocols looks much stronger than the wide market.

Main assets




What’s new to on-chain derivatives protocols?

  • Zeta has shared an analytics report with the community. The most noticeable point is that people are starting to use the Zeta futures, and the platform has a significant skew to the puts vs. calls: people are afraid of the future market decline and are protecting themselves against the potential bear market. Usually, such a big skew is a precursor of market direction changing.
    Click here to see the Zeta report. It’s also worth mentioning that the platform has reached $26M TVL.
  • Thetanuts, a multichain DOV protocol, closed their seed round for $18M led by Three Arrows Capital, Deribit, QCPCapital and JumpCrypto.
  • On Mango, it’s now possible to give your trading keys to other Solana accounts. It’s a very widespread and popular functionality on centralized exchanges, which allows people to delegate trading to other people without the possibility to withdraw money.
    More than that, the Mango team finally presented token locking that allows investors to lock MNGO for up to 5 years. The locking benefits are nevertheless quite weak now and include only an up to 2x voting weight. It’s likely that more utility cases will be proposed in the future. And last but not least, Mango presented Time in Force orders that have limited execution time. These orders are very convenient for market makers in case of slowdowns in the network speed.
  • 01 exchange announced the upcoming Power perpetual launch. It’s a new primitive and you can read more about it in the Paradigm article. Also, they developed binary options and were added to DefiLama. The protocol’s current TVL is $10,9M.
  • dYdX is developing a mobile platform with the iOS app now being in beta. In the modern world, people interact more with their smart devices, so a convenient app is a good way to grab more users.
  • PsyFinance (previously known as PsyOptions) is developing a v2 of the protocol. The most noticeable feature is the transition from American to European options. Furthermore, they’re planning to make it possible for all traders, not only market-makers, to participate in weekly options auctions.
  • Katana protocol has closed their seed round for $5M. led by Framework Ventures.
  • The Drift Protocol team has invented a mechanism for making limit orders in AMMs and had it implemented on their platform, here you can read more about the know-how.
  • Cypher is live on Devnet. People are able to trade SpaceX futures now. They are going to provide the possibility to trade pre-IPO stocks and other assets from TradFi for DeFi users.
Cypher SpaceX chart

What’s new to Spin?

On March 10, Spin had its Freaky Elves NFT collection minted at 0.7 $NEAR per NFT. After listing on Paras, the collection has become top-5 by weekly trading volumes and top-2 by number of NFTs sold. The floor price reached 3.55 $NEAR, x5 from the mint price.

The Spin team continues to work on the upcoming mainnet release of its order book DEX on NEAR Protocol as well as gets ready for the future public sale. Note that the Freaky Elves NFT holders will have priority access to the Spin token sale.

Funding rates arbitrage

A new trend in crypto derivatives is arbitraging funding rates. It looks like many developers set their eyes on this area due to the increase in the number of perpetual trading platforms.

Below are the Projects that are arbitraging funding rates:

  • DeCommas develops a bot, which extracts yield from positive funding rates.
  • UXD and Lemma, which were described in our previous report, produced a stablecoin based on a delta-neutral position.
  • Basis markets — software for arbitraging funding rates.
  • Juiced — on-chain protocol for generating profit on Mango funding rates

What does arbitraging funding rates mean? If a perpetual contract has a price much bigger than the index, then the funding rate is very high and buyers of perpetual contracts pay money to sellers with a certain frequency. In that case, users can buy assets on the spot and short equivalent amounts of perpetual. So the user doesn’t have the price risk, because the loss from one side will be compensated with profit on the other side, and he gets yield from funding. The same works with negative funding. Any user can do this strategy manually, but developers are trying to pack it with some products, which were described above.

The screen below shows the historical funding rate for BTC on Binance. Usually, when assets grow, funding is positive and vice versa. So, if funding is far from zero in any way users can arbitrage it, and that will decrease funding.

Source: Binance




Spin is a DeFi derivatives infrastructure built on NEAR Protocol, a reliable and scalable L1 solution. The on-chain order book solution offered by Spin provides a CEX-competitive experience to DeFi users.

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Spin is the first decentralized trading platform allowing for both futures and options trading built on Solana.

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